Tuesday, April 8, 2008

Nymex Scandals 2008 and 1881

Yeah, a gas trader. It was ever thus. Here's a story from the days when the NYMEX was the Butter, Cheese and Egg Exchange. From the
New York Times:


March 26, 1881, Wednesday

Page 8, 1951 words

The Assembly Committee on Public Health began its sessions in this City yesterday morning, at the Butter, Cheese, and Egg Exchange, No. 309 Greenwich-street...(Click the PDF if you want old scandals or see below for new)

From CNBC:

A floor trader who served on the board of the New York Mercantile Exchange agreed to serve five months in prison Tuesday after pleading guilty to fraud and evidence tampering related to commodities trading....

...He admitted that he engaged in fraud by delaying the allocation of customer orders to buy or sell natural gas contracts in order to wait to see what direction the market was moving.

In several instances, according to the court document, when the market price moved in a direction that made the order immediately profitable, Karvellas would then allocate the contracts to himself rather than allocating them to the customer....

Here's a Reuters Factbox:

History of agricultural markets in New York

Agriculture futures contracts began
trading in New York in the 19th century.
 Below is the history of the various exchanges in
New Yorkup until the IntercontinentalExchange
(ICE.N: Quote) shut down open outcry trading on
 1870 - The New York Cotton Exchange was founded
at 1 Hanover Square in lower Manhattan.
 1872 - Butter and Cheese Exchange created in New York.
Shortly afterward, eggs were added and this became
the Butter, Cheese and Egg Exchange.
 1882 - The Butter, Cheese and Egg Exchange became the
New York Mercantile Exchange (NMX.N: Quote).
 1882 - Coffee Exchange in the city of New York founded.
 1914 - Sugar futures contracts added to the Coffee
 1925 - New York Cocoa Exchange founded.
 1933 - COMEX founded through merger of the National
Metal Exchange, the Rubber Exchange of New York, the
National Raw Silk Exchange and the New York Hide